SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(D) OF
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of Earliest Event Reported) April 30, 1997
HOST MARRIOTT CORPORATION
(Exact Name of Registrant as Specified in its Charter)
Delaware
(State of Incorporation)
1-5664
(Commission File Number)
53-0085950
(I.R.S. Employer Identification Number)
10400 Fernwood Road, Bethesda, Maryland 20817
(Address of Principle Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code (301) 380-9000
<PAGE>
Item 5. Other Events
On April 30, 1997, the Registrant reported first quarter 1997 Earnings Before
Interest Expense, Taxes, Depreciation and Amortization and other non-cash items
("EBITDA") of approximately $154 million, a 105% increase over the prior year
results of $75 million. EBITDA from Host Marriott's full-service hotels
increased 122 percent to $149 million for the 1997 quarter versus $67 million in
1996. The Company considers EBITDA to be an indicative measure of the Company's
operating performance due to the significance of the Company's long-lived assets
and because EBITDA can be used to measure the Company's ability to service debt,
fund capital expenditures and expand its business. EBITDA is used by certain
investors to determine the Company's ability to meet debt service requirements
and is used in the senior notes indenture as part of the tests determining the
Company's ability to incur debt and to make certain restricted payments. Such
information should not be considered as an alternative to net income, operating
profit, cash flows from operations, or any other operating or liquidity
performance measure prescribed by generally accepted accounting principles. Cash
expenditures for various long-term assets, interest expense and income taxes
have been, and will be, incurred which are not reflected in the EBITDA
presentation. On a historical basis, cash from operations was $90 million and
$40 million for the twelve weeks ended March 28, 1997 and March 22, 1996,
respectively. Cash used in investing activities was $135 million and $132
million for the twelve weeks ended March 28, 1997 and March 22, 1996,
respectively. Cash used in financing activities was $129 million for the twelve
weeks ended March 28, 1997, while cash from financing activities was $59 million
for the twelve weeks ended March 22, 1996. The Company's ratio of earnings to
fixed charges was 1.2 to 1.0 for the first quarter of 1997, while the Company's
deficiency of earnings to fixed charges was $11 million for the first quarter of
1996. A copy of the press release is included as an exhibit to this filing.
Item 7. Financial Statements and Exhibits
(c) 99.1 News Release dated April 30, 1997.
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Host Marriott Corporation
By: /s/ Donald D. Olinger
-------------------------
Donald D. Olinger
Senior Vice President and
Corporate Controller
May 2, 1997
2
BETHESDA, MD; April 30, 1997 -- Host Marriott Corporation (NYSE: HMT) today
reported first quarter 1997 Earnings Before Interest Expense, Taxes,
Depreciation and Amortization and other non-cash items (EBITDA) of $154 million,
a 105 percent increase over the prior year amount of $75 million. EBITDA from
Host Marriott's full service hotels increased 122 percent to $149 million for
the 1997 quarter versus $67 million in 1996.
The company reported that the increase in full service hotel EBITDA was driven
primarily by comparable full service hotel EBITDA growth of 30 percent on a 19
percent increase in room revenue per available room (REVPAR), as well as
incremental EBITDA of $46 million and $20 million from 1996 and 1997
acquisitions, respectively. The company also noted that first quarter 1997 full
service hotel REVPAR and EBITDA comparisons were substantially impacted by the
exclusion of the New Year's holiday from the 1997 results due to the timing of
the company's fiscal year end. Excluding the impact of the timing of the New
Year's holiday, comparable REVPAR increased by nearly 12 percent.
Mr. Terence C. Golden, President and Chief Executive Officer of Host Marriott,
stated, "We continue to be extremely pleased with the ongoing strength of the
upscale and luxury segments of the full service hotel industry and our ability
to capitalize on the superior quality of our assets to maximize the benefit of
this trend. Even after eliminating the favorable impacts of the timing of the
1997 New Year's holiday and milder winter weather in 1997, our 1997 first
quarter results at comparable properties were exceptional. In addition, our
properties acquired in 1996 have yielded a substantial portion of our EBITDA
growth. The results from our comparable and acquired properties make us
confident that we can meet expectations for a strong 1997."
Mr. Golden noted, "We have completed or announced nearly $900 million of
acquisitions thus far in 1997, which puts us well on the way towards
accomplishing our 1997 acquisition target of $1.3 billion. We are optimistic
that the built-in growth from a full year's results from our 1997 acquisitions,
together with the continued strengthening of the hotel market, will position us
to continue our strong results into 1998."
Mr. Golden added, "We have adopted a comprehensive asset management program at
Host Marriott with a strong staff and state-of-the-art computer systems. Our
asset management group continues to focus on overseeing conversion, renovation
and property addition activities. They also work closely with property managers
to implement profit enhancement such as combining management organizations at
two of our New York properties, closing unprofitable restaurant operations or
repositioning a portion of our Miami Airport hotel. We expect these activities
to continue to improve the profitability of both our existing and acquired
properties."
Mr. Golden stated, "In the future, we expect to achieve a portion of our growth
through diversification into complementary lines of lodging-related investments
such as senior living communities. We have signed a letter of intent to acquire
a portfolio of 29 senior living facilities from Marriott International, Inc.
These assets are of very high quality and this acquisition will immediately
position us as one of the largest owners of senior living communities. These
assets will be managed by Marriott International, the leading operator in the
upper tier of this industry. The portfolio is being acquired at an acquisition
multiple of approximately 7.8 times based on estimated full year 1997 EBITDA of
approximately $55.2 million and we anticipate the properties will produce yields
similar to our experience with full service hotels."
Mr. Golden noted, "In 1996, we began to expand our investments into the luxury
segment of the full service market and have acquired four Ritz-Carlton
properties to date for nearly $390 million. These assets represent some of the
highest quality lodging assets in the world and have exceeded our performance
expectations thus far."
Mr. Robert E. Parsons, Jr., Executive Vice President and Chief Financial Officer
of Host Marriott, stated, "A key strategic objective of our company is to focus
on strengthening our balance sheet. We have made significant progress in this
area with a debt to total asset ratio of 52 percent at quarter end. In addition,
the company's interest coverage (defined as EBITDA divided by cash interest
expense) for the quarter improved to 2.6 times from 1.6 times for the 1996 first
quarter and 2.0 times for full year 1996."
Host Marriott's first quarter 1997 revenues increased 94 percent to $252 million
from $130 million in the 1996 quarter. Operating profit improved to $91 million
from $38 million in 1996, a 139 percent improvement. The company reported net
income of $11 million ($.05 per share) compared to a net loss of $12 million in
1996. Net income for the 1997 quarter included a $5 million ($.02 per share)
extraordinary gain from the extinguishment of debt.
Host Marriott Corporation is a lodging real estate company which currently owns,
or holds controlling interests in, 85 upscale and luxury full service hotel
properties primarily operated under the Marriott and Ritz-Carlton brand names.
The company also serves as general partner and holds minority interests in
various unconsolidated partnerships that own 250 lodging properties, 30 of which
are full service hotels.
Certain matters discussed within this news release are forward-looking
statements within the meaning of the Private Litigation Reform Act of 1995 and,
as such, may involve known and unknown risks, uncertainties and other factors
which may cause the actual results, performance or achievements of Host Marriott
to be different from any future results, performance or achievements expressed
or implied by such forward-looking statements. Although Host Marriott believes
the expectations reflected in such forward-looking statements are based upon
reasonable assumptions, it can give no assurance that its expectations will be
attained. These risks are detailed from time to time in the company's filings
with the Securities and Exchange Commission. Host Marriott undertakes no
obligation to publicly release the result of any revisions to these
forward-looking statements that may be made to reflect any future events or
circumstances.
*** Table follows ***
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HOST MARRIOTT CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED FINANCIAL INFORMATION
Twelve weeks ended March 28, 1997 and March 22, 1996
(in millions, except per common share amounts)
<TABLE>
<CAPTION>
<S> <C> <C>
1997 1996
------------- -----------
(unaudited)
Hotel Sales................................................................ $ 620 $ 370
========= ==========
Revenues
Hotels................................................................ $ 248 $ 126
Other................................................................. 4 4
--------- ----------
Total Revenues.................................................... 252 130
--------- ----------
Operating Costs and Expenses
Hotels................................................................ 151 83
Other................................................................. 10 9
--------- ----------
Total Operating Costs and Expenses................................ 161 92
--------- ----------
Operating Profit........................................................... 91 38
Minority Interest.......................................................... (11) (1)
Corporate Expenses......................................................... (9) (9)
Interest Expense........................................................... (63) (48)
Dividends on Convertible Preferred Securities of a Subsidiary Trust........ (9) --
Interest Income............................................................ 12 6
--------- ----------
Income (Loss) Before Income Taxes and Extraordinary Item................... 11 (14)
Benefit (Provision) for Income Taxes....................................... (5) 2
--------- ----------
Income (Loss) Before Extraordinary Item.................................... $ 6 $ (12)
========= ==========
Net Income (Loss).......................................................... $ 11 $ (12)
========= ==========
Net Income (Loss) per Common Share......................................... $ .05 $ (.07)
========= ==========
Weighted Average Common Shares Outstanding................................. 202.3 161.4
========= ==========
EBITDA
Full Service Hotels................................................... $ 149 $ 67
Limited Service Hotels................................................ 3 11
--------- ----------
Total Hotels...................................................... 152 78
Other Operating....................................................... (4) (4)
Corporate and Other, Net of Interest Income........................... 6 1
--------- ----------
EBITDA............................................................ $ 154 $ 75
========= ==========
Balance Sheet Data as of March 28, 1997:
Cash and Cash Equivalents............................................. $ 530
Total Assets.......................................................... 5,301
Total Debt............................................................ 2,731
Convertible Preferred Securities...................................... 550
Shareholders' Equity.................................................. 1,141
</TABLE>
